Brexit: Dispute Resolution and Enforcement (European Union Committee Report) - Motion to Take Note

Part of the debate – in the House of Lords at 5:37 pm on 17th October 2018.

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Photo of Lord Callanan Lord Callanan Minister of State (Department for Exiting the European Union) 5:37 pm, 17th October 2018

Indeed, and it is the EU position as well that there will be no extension of the implementation period. The terms of it are agreed. That is the position of the Government, and as far as I am aware that is also the position of the EU.

The noble Lord, Lord Hannay, asked me about the forthcoming withdrawal Bill. It used to be called the withdrawal agreement and implementation Bill, but to confuse matters further it is now called the withdrawal Bill—to add on to the withdrawal Act that we already have. Yes, the noble Lord is correct in his interpretation that to legislate for the implementation period, depending on the final agreement, we will need to modify parts of the withdrawal Act.

Moving on to the longer term, our White Paper on the future partnership published a detailed vision for the future security and economic partnership—a framework which we believe will deliver the unprecedented partnership all our leaders are committed to. The proposal advanced in the White Paper builds on the vision set out by the Prime Minister at Lancaster House, in Florence, at Mansion House and in Munich. As we leave the EU, we want to build a new deep and special partnership based on mutual trust and reliability, with a transparent way of ensuring that each side is acting in accordance with the final agreement.

To ensure that that new relationship stands the test of time, we will need to have the right structures in place for co-operation, decision-making and the prevention and resolution of disputes. We are proposing a system that provides institutional governance over the future relationship, including the areas where the UK and the EU agree to apply the same rules, and over our participation in certain EU bodies. We hope to achieve an arrangement that recognises the unique starting point of having the same rules and regulations. We have set out a clear structure to underpin the deep and special relationship we are seeking. The future relationship should be based on an overarching institutional framework which will encompass most of the individual agreements that make up the partnership and set out any common governance arrangements. These should include political oversight and a joint committee.

This framework draws on precedents from other international agreements, including those that the EU has entered into, which all have some form of institutional architecture. In general, the broader and deeper the relationship, the more important it is that there is a strong institutional architecture in place to govern it. We are seeking an ambitious deal, one that recognises the deep and special partnership that we have with the EU and its member states. This institutional framework, carefully designed to respect the autonomous legal orders of the UK and the EU, has the strength and flexibility to support the depth of the relationship we wish to create. In line with that principle of respecting our autonomous legal order, we have been clear that in leaving the EU we will bring an end to the jurisdiction of the CJEU. The proposal delivers on that commitment. No longer will courts in the UK be able to refer cases to the CJEU, or the CJEU arbitrate disputes between the UK and the EU.

We are proposing that, in some areas, the UK will make a choice to retain a common rulebook with the same rules as the EU. Where we have a common rulebook, it is possible that a dispute could relate to whether these rules have been interpreted correctly. The UK recognises that only the CJEU can bind the EU on the interpretation of EU law and therefore, in these instances there should be an option for a referral to the CJEU for an interpretation, either by mutual consent from the joint committee or from an independent arbitration panel. The joint committee or arbitration panel would have to resolve the dispute in a way that is consistent with this interpretation. This would respect the principle that the court of one party cannot resolve disputes between the two. In those areas where we have a common rulebook, it will be important for businesses and citizens here and in the EU that these rules are interpreted and applied consistently.

The noble Lord, Lord Anderson of Ipswich, asked about individuals’ access to dispute resolution mechanisms such as arbitration. While they will not have access to these mechanisms as they are at present for state-to-state disputes, we are committed to ensuring the consistent interpretation and application of the rules that we agree with the EU. The UK would also, therefore, commit by treaty that its courts will pay due regard to the relevant CJEU case law, in so far as this is relevant to the matter before them. As the White Paper makes clear, UK courts will not, however, be able to make preliminary references to the CJEU. This will not affect consistent interpretation of a common rulebook, which will be delivered through the commitment to pay due regard to existing case law. In other areas there will be a recognition that rules are equivalent. We will need to agree governance arrangements that, first, oversee the application of regulatory commitments, secondly, ensure that the common rulebook is interpreted consistently and, thirdly, enable the UK to participate in EU bodies and agencies where needed for co-operation to take place.

We believe that it is in the national interest and in the interests of certain sectors of our economy to maintain a smooth trading relationship by having rules similar to the EU’s, and to continue UK involvement in certain EU bodies. This is all aimed at enhancing our wider economic and security partnership with the EU, providing effective structures to oversee the process and providing certainty to businesses and citizens, so that their rights and obligations will be applied consistently in both the UK and the EU. The noble Baroness, Lady Kennedy of The Shaws, asked whether this model, set out in the White Paper, would also serve for governing the withdrawal agreement, while the noble and learned Lord, Lord Hope of Craighead, asked for an update on progress in negotiations. I would like to acknowledge that a great deal of progress has been made over the past couple of weeks in negotiations concerning the withdrawal agreement; however, there are still a number of areas that are subject to ongoing negotiations, one of which is the governance of this agreement.

I think I answered the question of the noble Lord, Lord Anderson, about individuals. He also asked about the British judge on the Court of Justice. Of course, as he will be well aware, judges do not “represent” their member states. As Sir Konrad Schiemann said in his evidence to the committee, the UK will no longer be a member state from March 2019 and it is therefore right that we should withdraw from the institutions. While we will not have a UK judge, we will still have the right to intervene before the CJEU and our lawyers will maintain their rights of audience.

Moving on to the issue of civil judicial co-operation and the Lugano convention, mentioned by a number of noble Lords, we also recognise in the sphere of private law the important role of civil judicial co-operation for businesses, consumers, employees and families in providing clear rules to resolve disputes in sensitive matters quickly and efficiently. That is why the UK wants our future relationship with the EU to include a mutually beneficial agreement on civil judicial co-operation. This would include co-operation in civil, commercial, family and insolvency matters. The UK has presented its position to the Article 50 task force team in the Commission, and that presentation is available on the GOV.UK website. That is subject to ongoing negotiations that we are taking forward with our EU partners.

I also reassure noble Lords about our continued participation in the 2007 Lugano convention. The UK has been clear that we will seek to participate in the convention after our exit from the EU. At the March 2018 European Council, we agreed that the EU will notify other countries that the UK is to be treated as a member state—